"Change or die" has become a truism in business today.
Employers must be able to change their organizations to meet the
demand of the ever changing business climate to survive. However,
the law can place significant hurdles in the way of employers who
try to change the terms of employees' employment.
An example of such a hurdle can be found in a recent decision of
the Ontario Court of Appeal. The Court upheld a significant award
of damages for constructive dismissal because the employer did not
offer to continue to employee the employee after it made a change
to the terms of employment. The Court made clear that employers
must actually make an offer of continued employment after the
employee refuses to accept a change in the job.
The Duty to Mitigate Applied to Constructive Dismissals
A constructive dismissal is triggered when the employer makes a
significant change to the terms of an employee's employment.
However, the employee may not actually be entitled to any award of
damages from a court.
If the court finds that the new terms of employment were not
humiliating or hostile, the employee may have a "duty to
mitigate" the possible claim for damages and continue working.
Failure to accept continued employment can result in a loss of any
entitlement to damages.
The Supreme Court of Canada made this point clear in the
decision of Evans v. Teamsters Local Union No. 31, 2008 SCC
20. In that case the employee was denied damages because the
court decided he should have accepted an offer of continued
employment from the employer.
In Farwell v. Citair, Inc. (General Coach
Canada), the trial judge decided that the plaintiff
employee was constructively dismissed when his role was changed
from Vice President of Operations to Purchasing Manager. The
employee's compensation would not have changed, but the change
in title reflected a diminished role in the company, resulting in a
loss of status and prestige. The employee was awarded 24
months' pay in lieu of notice under the common law.
The Court of Appeal agreed with the trial judge that a
constructive dismissal occurred. The Court also upheld the notice
period awarded in view of the employee's 38 years of service
and senior position.
The employer argued that the employee ought to have accepted the
position of Purchasing Manager as part of his duty to mitigate his
claim damages. His salary and benefits in the role would have
remained unchanged. The only difference in remuneration was a
lesser bonus. The employee was well liked at the company and the
circumstances surrounding his termination related to a
reorganization. As such, the employer asserted that there would
have not been any humiliation for the employee or hostile work
The Court of Appeal decided that, leaving aside the issue of
whether the employee would have experienced humiliation or a
hostile work environment, the duty to mitigate was never actually
triggered because the job had not been re-offered to the employee
after he refused to accept the initial change.
The Court held that when the employee refused to accept the
position of Purchasing Manager the employer was required to offer
the employee the opportunity to work out the notice period in the
We will be providing more information on this new development,
among other current hot topics in labour and employment law, at our
28th Annual Employers' Conference. Attendees receive 6 CPD
Credit Hours toward HRPA Recertification and this may apply toward
6 substantive CPD hours with LSUC. To review our complete agenda,
or to register, click here.
What Employers Should Know
The decision of the Court of Appeal could be viewed as adding a
technical requirement – being to formally offer continued
employment – to trigger the duty to mitigate on an employee
when a constructive dismissal has occurred. However, it's a
requirement that employers will have to comply with or face
constructive dismissal claims.
To further bolster a mitigation argument, employers should make
clear in the offer what the change in the job will entail. The
offer should include at a minimum meaningful detail regarding
duties, reporting requirements and compensation. The employee
should also be given a reasonable amount of time to consider the
offer and accept. Of course, the offer should be in writing to
avoid any conflicting recollections as to what was communicated to
Although the law does not always make it easy for employers to
adapt to ever changing business and economic conditions, it can be
possible to reduce the risk of liability in many cases with clear
communication to employees about the change to their jobs and what
options they have going forward.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The new Sexual Violence and Harassment Action Plan Act (Bill 132) imposes a range of new duties in regard to workplace harassment. These include requiring employers to amend their programs to implement workplace harassment policies and establish new rules for the investigation of workplace harassment incidents or complaints.
Receive expert guidance from experienced employment lawyers as to how your organization can comply with this new law painlessly and address workplace harassment effectively
This past year has been marked with significant changes to employment legislation, and watershed decisions that will affect employers for years to come. We've designed this year's conference to deliver a practical and digestible review of what you need to know to manage your employees effectively.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).